WASHINGTON (Reuters) - A bipartisan deal in Congress to
spare doctors from recurring Medicare pay cuts was in jeopardy
on Thursday, as Republicans ignored protests from physicians and
moved forward with legislation that would use the so-called "doc
fix" to undermine Obamacare.

Hundreds of thousands of doctors who participate in
traditional Medicare face a 24 percent pay cut on April 1, as
part of a 1990s initiative to restrain federal spending on the
government healthcare program, which today serves nearly 50
million elderly and disabled people.

Doctors thought they would see a permanent fix this year
after Republicans and Democrats in the House of Representatives
and Senate agreed on a policy to replace the payment formula,
known as the sustainable growth rate or SGR, according to
lobbyists, congressional aides and analysts.

But efforts to seal the deal broke down over how to fund its
$138 billion cost over the next decade, and the doc fix appeared
to be in danger of political oblivion as Republicans in the
House and Senate pursued legislation that would pay for a
solution with money from President Barack Obama's signature
healthcare reform law.

The sudden partisan character of the doc fix debate brought
an unusual public rebuke from the American Medical Association,
one of the most powerful lobby groups, representing 225,000
physicians.

"I am writing to profess our profound disappointment that a
strong bipartisan, bicameral effort to repeal the Medicare
sustainable growth rate has become a victim of partisan
approaches," Dr. James Madara, AMA's chief executive, said in a
Thursday letter to House Speaker John Boehner and House
Democratic leader Nancy Pelosi.

"We renew our call for all parties to engage in good faith,
bipartisan efforts to address the budgetary implications of this
bill and enact it. We stand ready to work with you in this
endeavor."

Other physician groups also expressed their displeasure over
the partisan turn.

"It's a sad state of affairs," said Dr. Thomas Barber, a
lobbyist for the American Academy of Orthopedic Surgeons, which
represents 16,000 physicians.

"To see something that was supported by both parties get
shanghaied into the partisan politics of the day is very
frustrating," he said.

NOVEMBER ELECTION

Congressional aides described the Republican legislation as
a signal that a months-long push for a permanent, bipartisan doc
fix is unlikely as the political calendar moves toward the
November election. Instead, they said doctors would probably see
a temporary patch of nine months or more that would avoid the
April 1 pay cut and postpone a permanent solution into the next
Congress, which takes office in January 2015.

Lobbyists said that could mean starting the process over,
especially if a Republican Senate victory in November creates a
new political dynamic between Congress and the Obama White
House.

Analysts said it also eliminates an opportunity to move
traditional Medicare away from its costly fee-for-service
structure. Republicans and Democrats agreed to replace the SGR
with policies that call for Medicare doctors to accept new
performance standards or participate in alternative care models
designed to improve service while lowering costs in exchange for
avoiding pay cuts.

House Republicans are poised for a Friday vote on a bill
that would find the money by delaying the individual mandate
penalty in President Barack Obama's healthcare law for five
years, an action opposed by the White House and its Democratic
allies in Congress.

The bill advanced on Thursday on a procedural vote, largely
along party lines.

Meanwhile, Republican Senators Orrin Hatch and John Cornyn
were joined by Senate Republican Leader Mitch McConnell on a
bill that would repeal the individual mandate altogether to
generate money for a permanent doc fix.

Lobbyists said the bipartisan momentum ended in the early
weeks of 2014, after oversight committee chairmen from both
congressional chambers struck a deal on policy language that
they incorporated into legislation.

Behind-the-scenes efforts to reach a deal on money quickly
ran aground, with Republicans demanding that the money come from
entitlement reforms to Medicare and the Medicaid healthcare
program for the poor, and Democrats pushing for hypothetical
savings from the wars in Iraq and Afghanistan.

The AMA, which has led more than 600 other physician groups
in a lobbying effort to secure a permanent doc fix, says it is
still hoping for a permanent solution this year. Analysts say
some doctor groups are pressing lawmakers to agree to a shorter
patch of only a months to sustain the opportunity for dialogue.

The AMA says there have been 16 temporary SGR patches so
far, costing taxpayers $154 billion. Securing an agreement on
the doc fix is one of the association's highest priorities.